How do I get a commercial mortgage

Austria is among the top 5 among the 28 EU countries when it comes to offering foreigners the most acceptable loan terms, regardless of whether it is a commercial or a residential investment. Austrian banks offer attractive mortgage rates between 2% and 4%, which is relative to the conditions for residents. For comparison: In Russia, the mortgage rate was 9% in December 2019, which was a record low. Now mortgage rates in the territory of the Russian Federation under the state program start at 6%, and the weighted average rate is about 10% per year.

In Austria, the average mortgage interest rate reached a high of 1.39% in February 2020, while the highest level of 7.19% was recorded in 1995. The average value for this period was 3.85%.

At the same time, the amount of loan capital in Austria starts at € 25,000, which is less than the € 50,000 set in Spain or Germany and € 75,000 in France. The loan repayment term can be up to 35 years and the down payment must cover at least 30% of the purchase price of the property. Thus, the general conditions for obtaining a mortgage in Austria are quite affordable and attractive for residents of non-EU countries.

It should be noted, however, that third-country nationals may find the conditions for obtaining a mortgage in Austria more difficult than in other European countries. Sometimes the down payment can be 50-70% of the housing costs, and the regular income should be enough so that the borrower has at least € 2,000 in the account after the transaction of the current loan installments (if there are children or dependents, then more). While any specific interest and income requirements can vary from bank to bank, the overall scale is roughly the same.

If you want to address the subject of "pitfalls" of mortgage loans to non-residents in Austria and submit an application, you must collect all the necessary documents in advance. It is imperative to obtain a special permit for the purchase of real estate from the local land transfer commission, which shows the purpose of the legal use: for business, housing or work. There are no difficulties in using the main residence, because when buying a property in addition to the existing one, for example, living on vacation, the procedure becomes more complicated. In practice, it is very difficult to acquire real estate in holiday regions such as Tyrol and Salzburg. However, the government can approve such a permit in less popular regions and outskirts, and even give buyers a permit to stay in the EU. For example, the local government supports business development and encourages foreigners to invest in commercial real estate.

Since foreigners are usually classified as more at risk before a mortgage is approved, Austrian banks assess the profile of the borrower with caution. They check in more detail their solvency, their relatives, their running costs, etc. As proof of income, Austrian banks need documents for the past 3-5 years. In this case, it is desirable that the income was obtained in the EU. However, if the borrower has a high permanent and legal income in Russia, this may be enough. Receipts from Russia must be translated into German. However, in order not to prove the legality of the resources, it is worthwhile to open a bank account in advance with one of the EU banks and make the first installment on the mortgage from it.

Since real estate in Austria is very often bought for rent, a mortgage offers separate tax advantages, namely: The costs for registration and interest are deducted from the tax base and reduce the amount of income tax significantly or completely.

It is worth mentioning that mortgage brokers are rare in Austria and only banks grant real estate loans. In small towns, a bank or an employee can seek advice from a notary, attorney, or broker. Market leader - Volksbank, BAWAG, Erste Bank Group, Bank Austria, Bawag PSK, ING-DiBa Direktbank Austria, Immo-Bank.